All Forum Posts by: Brent Coombs

@Dominick Martinez, oh to be young again.  The idea is: get credit, and money, first.

Otherwise, you're battling uphill paying high interest to money Lenders, and/or risk becoming a Wholesaler "wannabe" by spending days and weekends trying to find bargains that you can on-sell for more than you promise to pay Sellers, but then falling in a heap when you can't find buyers to pay the extra you think it should be worth.

That's not the way you want to enter Real Estate.

There's properties that can be bought for less than $10k - and you have to live somewhere, right?  How good are your trade/repair skills?  Can you cope in the 'hood?

No need to answer, until you've saved up your first $10k.  Good luck...

@Yaamu Camara, asking if "he would be willing to eliminate the bank" suggests (to him) that you aren't qualified to get a loan from a bank yourself - even though you're telling us that you are.  Did you have any pressing reason to want him to Seller-finance?

If a high deposit is a problem, your pitch needs to show that your monthly repayments to him would be at least what he is netting now (ie. ask for his income / expenditure records for prior years), and remind him that he would be free of Tenant maintenance requests / non-payment issues going forward. And, if you renege, he gets his property back.

The Interest Rate you're prepared to pay should be better than he can get from a Bank.

Note: If you can get Bank approval, you're in a better position to get a "cash" discount.

Seller-financed, you're unlikely to succeed in pushing for a lower selling price.  Good luck...

I agree with what @Joe Splitrock wrote above:..."pointless/costly to refinance over and over like that" (because, conventional non-owner occupied loans can also be low deposit).

My premise of "only buy bargains" is largely so that each time you qualify for your next (low deposit) mortgage, your Loan-To-Value Ratio should still remain below 80% (even though you might have borrowed 95% or more for each prior one), because you bought bargains in the first place, and/or have value-added to each property.  Go get 'em...

@Montez B., what @Matthew Brill said.  But given your wise ambition, you don't want to refinance each time with just another owner-occupied loan, right?

ie.  You need to go for homes where you're able to force appreciation within the time frame of being allowed to refinance out of FHA/Owner-occupied loans.

ie.  Only buy Bargains, and/or those with Potential that you can realize.  Cheers...

@Patrick McCracken, aren't you effectively asking for a third mortgage against the same property? Even though you haven't spent your $25k HELOC yet, its liability would still take your LTV beyond the 70% you were talking about, right?

As well as agreeing with those folk who say $11k closing cost seems way too high, I suggest that the main issue you have (as with any Investor who can get cash out of thin air) is holding out until you find the right bargain (rather than only relying on future value increases which may or may not continue).  Well done on the historic gains though...

Ashish already answered your question: "The interest is deducted at the new activity, not the old property".

ie.  There would be no splitting any extra dollars towards property A.

ie.  You can't deduct extra interest against property A if you aren't using the new loan for property A.

How about, use a Tax Accountant (especially regarding the minutiae), ok?  Cheers...

@Jessie Xu, if interest is deductible on borrowings for investment assets, I don't see this as being any different.  

ie.  It shouldn't matter to the IRS what your Lender uses as collateral for the loan.  

You Accountants out there, if I'm wrong about that, please let us know.  Cheers...

@Phillip Repalone, why wouldn't you want to buy another Primary (again using an FHA-Approved Lender) after your requisite 12 months is up?

ie.  Why would you want to go back to renting?

ie.  Why aren't you thinking of scaling your buys each year you can?

ie. There is no need to "get around" the FHA Rules.

ie. Yes, you can only have one FHA low deposit Primary loan at a time, but, you don't want to put yourself in the position of never being able to apply for another one, if you want to rent out the total property ASAP. 

[ie. Done by Refinancing out of that FHA loan before applying for a new one].

Get what I mean?  Good luck...

Oops, did I get my Investors mixed up?  Should I have said "My concern is whether 'Investor ONE' has the experience/personality to take on Managing an AirBNB gig"?

ie.  Is your "proven track record" Investor the same one who has offered to manage this for 10% more of the profit?  (Otherwise, my concern remains).  

Nonetheless,  I don't think any PM should be charging 20% of income to manage, even if it is for BNB.  ie.  Half should be less than 10%.  Cheers... 

@Benjamin Enriquez, certainly, "Investor 1" should not agree to pay a full 10% PM (or whatever actual) fee out of their own profit, regardless of who is doing the Managing, but just half, like every other expense.

My concern is whether "Investor 2" has the experience/personality to take on Managing an AirBNB gig.  Anecdotally: Not for the faint hearted, and yes, likely to cost more than 10% for a proper BNB Manager.  Good luck to them...